However, the proposed tougher regulations won't apply in London where Ofcom is easing the burden on BT because there is so much competition from rivals.

Businesses, mobile operators and broadband providers lease capacity on BT's lines so that they can transfer data.

Ofcom said the new rules will "significantly reduce the price" of newer broadband technology such as ethernet services.

The savings will be worth 11 percent below inflation per year over the next three years.

The regulator imposed the rules on BT, Britain's biggest telecoms firm, because it has "significant market power in this relatively new market".

Analysts at Espirito Santo estimated that the size of BT's revenues in this area could be in the vicinity of pounds sterling 700 million a year but it noted that "the company has yet to clarify the exact impact should these proposals be enacted".